The 1970s All Over Again?

A reader of my blog sent me a picture a couple of weeks ago.  I’ve re-created it and will continue to update it over the next few weeks.  It’s really uncanny how similar the 1970s is to today’s market.  I put a picture below which shows the stock market from 1971-1975 (white) compared with the S&P 500 from 2006 to now.  You can see it’s very correlated.  Obviously things won’t work out exactly the same but don’t you think investors back then we’re thinking they couldn’t go any lower.  Every rally was met with sellers and we’d go to new lows.  So, it’s not out of the question.  I still believe we’ll have a rally soon as the markets are still oversold, but again I think they’ll be opportunities to sell and short.

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2 Responses to “The 1970s All Over Again?”


  1. 1 Bruce Prine October 2, 2008 at 6:29 am

    Karl,
    Extremely interesting chart! A big factor in the 1970’s market was the price of oil. The 1973 oil crisis began in October 1973. I cannot tell exactly where that is in your chart but it would be very interesting to see Oil prices over laid on these charts for both of these time periods. I really appreciate your blog. You and Daniel have saved me much regret this year. Thank you for what you do.

    Cheers,
    Bruce

  2. 2 Binh October 13, 2008 at 10:22 pm

    Very interesting. I would like to know if the months are identical? If not, are we about to drop further down? Thanks


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